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Make Saving a Habit

Make Saving a Habit

If there is one financial habit which will get you ahead it is this one…

Saving!

Why you must develop the savings habit

It is not how big your pay packet is, what counts is what you do with the money. Irrespective of your financial situation, it makes economic sense to save a portion of your income regularly. the mains reasons for saving are;

1-For unexpected emergencies such as car expenses, the washing machine breaking down, or dental bills.

2-To put aside money for your retirement.

3-Holidays or wedding expenses.

4-study expenses

5-Home repairs.

6-To save for a deposit for a home.

7-Saving for a car

8-Saving for a business

Consequences of not having any savings

If you do not have any savings of your own then if an unexpected emergency crops up such as the car breaking down then you may have to borrow the money to pay for repairs and every time you borrow money, the interest you pay means that you are always paying a higher price for goods and services bought with borrowed money than someone who always pays in cash.

Saving money requires you to live within your means and to live modestly. Good savers will not purchase items brand new when they can find the same item in a charity shop at a fraction of the price. 

Your choices will make or break you

Every time you make a choice there will be consequences, good or bad. The key is to make enough good choices to succeed and to minimize your bad choices. It is important to keep your eyes and ears open to what is happening around you and listen to wise people who have succeeded in their chosen field. Having said that, you must row your own boat and discover your own calling in life.

Joining your country’s retirement scheme.

Many countries around the world have their own retirement savings scheme where a portion of your gross income is invested in that country’s retirement fund and your money cannot be withdrawn until you reach retirement age which varies between different countries. (In New Zealand it is currently 65)

Accumulate investments.

It is a good idea to not only have a retirement fund but invest in various areas to increase your financial knowledge. The share market, managed trusts, and fixed term investments are all well worth getting into.

Don’t place all your eggs in one basket

Don’t under any circumstances place all of your eggs in one basket. There is no guarantee that a particular company will not go under irrespective of how solid it appears. After all, if a company is in trouble, its directors are hardly going to shout it out from the rooftops are they? During the economic downturn around 2008, many people lost a lot of money in failed finance companies and the tragedy was that many of these folk invested their entire life savings into the one company. In other words they placed all of their eggs into one basket. The number one rule is to spread your risk. Divide your money among several different companies. That way you stand a far better chance of protecting your financial assets.

Www.robertastewart.com

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6 Recession Proof Industries

6 Recession Proof Industries

Written by R.A.Stewart

When a recession occurs self confidence is reduced and spending is reduced. Some industries do well during recessions because whatever happens during the economy we all still have basic physical needs to meet.

Those industries rely on discretionary spending money are those that are most likely to be affected during a recession. In a period of belt tightening people will cut back on non necessities such as travel and the like.

A recession means job losses and while no industry is 100% recession proof there are some that will get through the recession better than others. 

Here are some industries which are expected to do better than average during a recession.

  1. Dairy Farming

Dairy products are basic grocery items and if you have the skills and the aptitude then you will be rewarded for your diligence. Retail outlets whose customers are farmers will buck the recession. 

It is only the price of dairy products which will affect retailers. If farmers have the money to spend they will spend it. 

Company to note: PGG Wrightsons 

  1. Healthcare

Health care will always be in demand, more so with an ageing population. If you are involved in this industry then you will always have opportunities for employment. The number of retirement villages is increasing in line with the increasing ageing population and this provides opportunities for investors with many of them being listed on the New Zealand stock exchange.

Company to note: Somerset

  1. Consumer Basics

There are basic items which are always in demand irrespective of what the economy is doing. Basic food items, toothpaste, toilet paper, shampoo, shaving foam, laundry detergent, and the like are recession proof.

Company to note: Any company which deals in these products.

  1. Pet Food & supplies

People will still spend money on anything related to pets during a recession because pets still need feeding. There is an increase in the number of cats and dogs handed to the SPCA during the cost of living crisis but there is still a lot of demand for pet supplies irrespective of what shape the economy is doing.

  1. Utilities

There will always be a demand for utilities because it is a fixed expense in every household. 

Companies to note: Genesis Energy, Mercury, Mighty River Power, and Contact Energy + others.

  1. Alcoholic Beverages

There will always be a demand for alcoholic drinks and has been for the past 2000 years and beyond. 

This list is by no means complete. There are dozens of industries which are recession proof; it is just a matter of choosing one which best suits your skill set if you are in the process of choosing your vocation or changing the one you already have. It is a good idea to add a few strings to your bow by working in different types of jobs or careers. 

As far as the share market is concerned, it provides some insight into which companies are likely to survive the cost of living crisis better than others.

This article is of the writer’s experience and opinion and may not be applicable to your personal circumstances.

Disclaimer: I may receive a small commission if you sign up for sharesies or coinbase.

Www.robertastewart.com

#recessionproof #personalfinance #retirementsavings

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Relationships can hinder your wealth plan

Relationships can hinder your wealth plan

Written by R. A. Stewart

“He who walks with wise men shall become wise but a companion of fools will be destroyed.”Proverbs 13:30

The person you form a relationship with can destroy your wealth creation plan and your future financial success if you CHOOSE the wrong person and I emphasise that word CHOICE because so many people during the Cost of Living Crisis blame the government for their financial situation and are completely oblivious to the fact that it is their own choices which put them there in the first place.

I mean let’s face it, only a responsible person will enter into a relationship when they are in a suitable financial position to do so and that is not the only issue.

If your chosen partner has a bad credit rating and you have a good credit rating then guess who is going to be persuaded to sign along the dotted line when your partner wants to borrow money for whatever reason?

Then there will be the difficulty in getting a mortgage if you both want to purchase a house and you have a good credit rating and he doesn’t. It has happened!

Another factor is your prospective partner’s attitude to money. Has he or she made any kind of financial plan for the future? A responsible person would!

At the very least they should belong to a superannuation scheme, in New Zealand it is called Kiwisaver.

Years ago I knew an old lady who was still working at an age when others would have retired. She was a waitress. She believed that men who have a lot of money are selfish and stingy. 

Men are better off avoiding gold diggers such as her.

It all boils down to responsibility for your own finances. A responsible person will make provisions for their later years by joining their country’s retirement scheme. In New Zealand this is called Kiwisaver. It should be pointed out that your kiwisaver could become part of property matrimony in the case of a break-up but you don’t even have to be married for this to occur. In New Zealand, a relationship of three years whether you are married or not will mean that any asset acquired during the relationship is equally owned and that includes savings in kiwisaver but only contributions to kiwisaver during the term of the relationship. 

If someone is irresponsible in the matter of finances then it is likely that they are irresponsible in other areas of their lives.

Having wisdom in the matter of relationships will make a big different to your long-term financial position. Lack of wisdom can send you to the poor house.

I will end this with something our teacher Mr. Hart said when we were at school, I was 13 when I was in his class.

During spelling lessons he used to tell us a story with one or two of the words that we were learning and on this particular occasion one of the words was wisdom. He told us this story:

One rainy day he was driving along McGowan Street which is the main street in the town where I attended primary school. (there was no intermediate school back then). Mr. Hart told us that he saw a man sheltering from the rain under the verandah of the shop and the man was reading the Friday Flash which is a horse racing paper. Mr. Hart then said, “If that man had wisdom he would save up his money to buy a raincoat for himself instead of spending it on the horse races.

Such is the value of wisdom.

About this article

You may share/print this article or even publish it on your blog/website/ebook. 

Www.robertastewart.com

The information in this article is based on the writer’s experience and may not be applicable to your personal circumstances therefore discretion is advised.

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Dumb Debt can destroy your financial future!

The quickest way to a financial mess is to borrow for stuff that loses it’s value. You not only pay more for such items but the item is worth less than when you acquired it because it is no longer new once you take possession of it and therefore you will receive less than what you paid for it. This is called “Dumb Debt.”

Avoiding Dumb Debt at all costs

Written by R. A. Stewart

Everyone has seen the television commercials with slogans such as “Buy now pay later,” and the like.

you do not need to save your money to buy that new car, a wide screen TV, that latest smartphone, or a holiday in a tropical island when you can have all these things now. 

Instant gratification is a very expensive habit; one that will lead you to a life of financial challenges.

There have been misleading statements in some of the advertising; one I saw read, “Helping you to get ahead.”

That kind of slogan suggests that  the finance company is doing borrowers a favour which is far from the truth.

Loan sharks and finance companies thrive on financial ignorance; a person with even a basic grounding in personal finance will avoid loan sharks as if they had tested positive for covid.

One should ascertain whether the item is a want or a need before signing on the dotted line. 

Many people go into debt because they want to live a champagne lifestyle on a lemonade budget just to impress their friends. They are not happy with living modestly. 

An expensive lifestyle is costly in the long run. 

The parable of the prodigal son is a perfect example. Here was a young man who blew his inheritance on wasteful living and ended up living in poverty due to his lifestyle.

He not only blew his inheritance but was most likely living on credit.

It is borrowing that really kills off a person’s chances of financial success. That interest rate is dead money; it is the cost of borrowing.

Paying interest on stuff you have bought on credit adds to the cost of it and the value of a lot of stuff bought on credit is worth less as soon as you take possession of it.

“If you don’t have the money you don’t buy it,” is a simple philosophy to adopt.

What you think you cannot live without is something others have learned to live without. 

It all comes down to the choices we make.

There are some circumstances when it may be wise to borrow such as when the value of the item you are purchasing is going to make it financially worth your while such as a student loan. This may or may not mean you will get a good paying job but you must be absolutely clear that it is what you want to do otherwise the course will be a total waste of money.

ABOUT THIS ARTICLE

Feel free to use this article as content for your website, blog, or ebook. Check out my other articles on www.robertastewart.com

Disclaimer: The information in this article may not be applicable to your personal circumstances therefore discretion is advised. I may receive a small commission if you make a purchase from any of the links you click on.

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Using the rule of 72 to get wealthy

Using the rule of 72 to get wealthy

Written by R. A. Stewart

Do you know how long it takes for your money to double using the rule of 72?

Using the 72 formula it works like this:

Simply divide 72 by the interest you are receiving on your money. Of course the calculation does not include the tax paid on your investment.

Another name for the rule of 72 is compounding interest or dividends as is the case when investing in the share markets. You are receiving an income from your original investment plus from the dividends and interest which are left untouched.

This is called compound interest.

There may be a temptation to hasten the doubling up period by searching for high interest investments. My advice is to be careful because if a finance company is paying it’s depositor’s higher than normal interest rates it only means that they are charging their borrowers higher interest rates than the banks. The reason why someone would pay higher interest rates is because they couldn’t get a bank loan because they are considered risky borrowers.

Several finance companies went belly up during the Global Financial Crisis of 2007/2008. These were companies paying higher interest to their investors than market rates.

I did lose money on some of these companies. On reflection, instead of letting the interest compound I should have taken them and invested the interest into my Kiwisaver account.

The rule of 72 is just as applicable to investing in the share market. Your investment can grow using the same principle in managed funds or mutual funds as they are also called but profits can vary. 

You can calculate how much your investment needs to grow per annum in order to double within a specified time. 

72 / your time frame (years)

If you want your money to double in 10 years then you would need an average annual return of 7.2%

The important factor is time. Young people have that in their favour. 

Someone on the verge of retirement is not going to make plans for what they are going to do in thirty years time. Your age is an important consideration to where and what you invest in.

The rule of 72 also works for borrowers. You can work out how long it will take for your debt to grow with this simple formula: 72 / interest rate so if you are paying 15 percent interest rate the amount you owe will double in 4.8 years.

That is of course assuming that you have done nothing to pay off the debt.

It underlines the importance of paying off debt as quickly as possible.

About this article

This article is of the opinion of the writer and may not be applicable to your personal circumstances therefore discretion is advised. You are welcome to use this article as content for your blog or website. 

I may receive a small commission if you sign up for Sharesies or Coinbase.

www.robertastewart.com

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Financial know how

Readers are leaders.

INTRODUCTION

There is no excuse for financial ignorance when there is so much finance information available on the internet and in printed form. Becoming familiar with the various forms of investments will hold you in good stead for the future.

How to gain financial literacy

Your financial literacy is your ability to make financially smart decisions. You were not born financially smart or dumb; your financial knowledge or ignorance was developed over a period of time. I assume that you are not ignorant otherwise you would not be reading this. So without further ado, here are some ways of gaining financial literacy.

Your own experience

There is no better teacher than your own experience but that does not mean you have to go ahead and make all of the mistakes it is possible to make. It is more a case of using your personal judgment based on your knowledge and the advice of others but you will make mistakes along the way; it is a part of the learning process. It is a matter of who to take advice from and whose advice to treat with a grain of salt. 

An excellent way of gaining financial literacy is to register with one or more of the share market online platforms where you are able to buy and sell shares online. Only a minimal amount of money is needed to get involved. In New Zealand sharesies.nz is one such platform but is by no means the only one around. Other countries have similar such share trading platforms available.

Experience of others

The easy was to learn is from the mistakes of others. All you need to do is to keep your eyes open; many people do not do this and instead follow others like sheep. This is not necessarily the best way. In fact history has taught me that following the crowd is often the wrong way. A classic example is the share market when a stock is valued well above it’s true worth because so many people have jumped on the bandwagon and bought shares in that particular company because everyone else is doing it. It is young people without experience in the markets who are prone to this mistake.

It pays to go against the crowd; what this means is that you look for bargains in the markets whether it is gold, shares, property, and so forth. You do not have to experience what others are experiencing if you have the ability to assess what is a good investment and what is not.

Be prepared to listen to what the older generation have to say. Many of their opinions will be based on their own experience.

Books

Ignorance is no excuse as far as not being financially educated because your local library will stock books on finance. There are some terrific books on finance, some I recommend are, “Rich Dad Poor Dad,” by Robert T. Kiyosaki with Sharon L. Lechter. They have several other books which are recommended reading. “How to Be Rich & Happy” by Hans Jakobi, Australia’s wealth coach is another book I recommend. Hans also has several other books published, “Underground Knowledge” and “Due Diligence,” are two of them. “Making money made simple” written by Australian financial advisor Noel Whittaker is a good read. Frances Cook, Mary Holm and Martin Hawes are other excellent financial authors.

The internet

There is a lot of information available online on finance and investing; a simple google search will bring these up but like listening to your mates you have to use your own judgement when assessing the information from some sites and how it relates to your own personal situation. Martin Hawes and Mary Holm are both reputable advisors with good websites.

Newspapers

Most newspapers carry financial information and these are worth reading. Cut out articles that interest you; they make good reading in a year or so. 

www.robertastewart.com

ABOUT THIS ARTICLE

Feel free to share this article or post it on your site. You also have permission to use it as content for your ebook. My blog www.robertastewart.com has down to earth information about everyday finances. 

The information in this article may not be applicable to your personal circumstances so discretion is advised. I may receive a modest sign up bonus if you decide to join sharesies.nz

Start investing on a shoestring

Sharesies makes it possible for anyone to get into buying and selling shares. It is an online share market platform where you have the option of purchasing shares in individual companies or in various funds (managed/mutual funds). You can even start with $5. This is a no brainer because it gives investors young and not so young the chance to improve their financial literacy. There is certainly no substitute for experience when it comes to learning and this is applicable to everything else, not just investing.

Join sharesies here: https://sharesies.nz/r/377DFM

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The cost of owning a dog

Owning a dog can be a rewarding and fulfilling experience. Dogs offer companionship, protection, and loyalty to their owners. However, owning a dog is not just a matter of fun and games; it also comes with a significant financial commitment. There are several costs involved in owning a dog, from initial expenses to ongoing maintenance costs. In this article, we’ll take a closer look at the cost of owning a dog.

Initial Expenses

The initial costs of owning a dog can be quite significant. These include the cost of purchasing or adopting a dog, which can range from a few hundred dollars to several thousand dollars, depending on the breed and where you buy the dog from. Some breeds, such as purebred dogs, can be more expensive than others. Adopting a dog from a shelter can be a more affordable option, as the fees are usually lower.

In addition to the cost of the dog itself, there are also other initial expenses to consider. These include things like:

  • A collar and leash
  • Food and water bowls
  • A bed
  • Toys and treats
  • Training classes
  • Veterinarian checkup and initial vaccinations
  • Spaying or neutering

All of these expenses can add up quickly and can easily cost several hundred dollars.

Ongoing Expenses

Once you have your dog, there are ongoing expenses to consider. These include:

  • Food: Depending on the size and breed of your dog, food costs can range from $20 to $60 per month.
  • Veterinary care: Annual checkups, vaccinations, and preventative care can cost $200 to $500 per year. If your dog gets sick or injured, veterinary bills can quickly add up.
  • Grooming: Depending on the breed of your dog, you may need to take them to a groomer for regular haircuts and maintenance. Grooming costs can range from $30 to $100 per visit.
  • Training and obedience classes: If you want to train your dog, you may need to take them to obedience classes or hire a trainer. These costs can range from $50 to $150 per session.
  • Boarding and daycare: If you travel frequently or work long hours, you may need to board or hire a dog sitter to take care of your dog. These costs can range from $20 to $75 per day.

Other Considerations

In addition to the direct costs of owning a dog, there are other considerations to keep in mind. These include:

  • Time commitment: Dogs require a lot of time and attention, including regular walks, playtime, and training sessions.
  • Housing: If you rent your home, you may need to pay an additional pet deposit or pet rent.
  • Home and yard maintenance: Dogs can be hard on your home and yard. You may need to replace carpets, repair damage, or invest in a fence to keep your dog safe.
  • Travel: If you plan to travel with your dog, you may need to pay for additional accommodations, such as pet-friendly hotels or airline fees.

Tips for Saving Money

While owning a dog can be expensive, there are ways to save money. Here are some tips to help you keep costs down:

  • Buy in bulk: Buying dog food, treats, and other supplies in bulk can save you money in the long run.
  • Shop sales: Look for sales and discounts on dog supplies and toys.
  • Take care of your dog’s health: Regular exercise and preventative care can help keep your dog healthy and reduce the need for expensive veterinary visits.
  • DIY grooming: If you’re handy with a pair of clippers, you can save money by grooming your dog at home.
  • Plan ahead: If you know you’ll need to board your dog or hire a pet sitter, plan ahead and book early to save money

Here is something which may be of interest to you; Obedience training for puppies. Check it out here:

https://affiliates.trainpetdog.com/idevaffiliate.php?id=10551

www.robertastewart.com

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Investing for seniors

Investing for seniors

Written by R. A. Stewart

 

Your age is a crucial factor in establishing your savings and investing strategy. Your 20s, 30s, 40s, and 50s are your savings years. It is these years when you build up your assets. 

Your 60s and 70s can be considered your spending years. It is when you tick off items on your bucket list while you are able to.

That does not mean that you do not have to work, a lot of older people are taking this option, not because they cannot make ends meet on their pension, but because they enjoy what they are doing.

In New Zealand, retirees will have access to their kiwisaver account once they reach the age of 65. Money invested in kiwisaver will be in growth, balanced, or conservative funds. Most people during their working life opt for growth or balanced funds.

It is time to decide whether to stay with the status quo or invest in more conservative funds. 

Your age and your health are the two most important factors in deciding which fund to invest your money in. 

Older people do not have time on their side to overcome financial setbacks such share market falls and so forth, therefore if you are 60+ it is a good idea to lean toward more conservative investments but still retain some exposure to risk.

It is worth mentioning at this point that New Zealand financial advisor and writer Frances Cook has a formula for calculating how much exposure you should have based on your age, and it is this…

Subtract your age from 100.

If for example you are aged 60 then only 40% of your portfolio should be invested in the share market.

I do not necessarily agree with this formula and my exposure to the share market is more than her formula suggests I have.

However, that is a personal choice; one that I do not necessarily recommend to you because your circumstances will be different as they are for different people.

If you are connected to the internet and you have a lot of spare cash in your account then I suggest that you place most of your money into an account that is not connected to internet banking. This is to reduce your chances of becoming a victim of internet scammers. 

With internet banking being the norm, this could be difficult in the future though.

In any case I still believe that it will pay to arrange your finances so that if you fall victim to a scammer then not all of your money will be lost. 

Don’t leave all of your money in the one account for goodness sake as some victims of scammers have.

If you are traveling then make sure you don’t have access to your life savings because if you do then so will be a scammer if they manage to get hold of your login details.

Scammers have all kinds of ways to trick people into handing over their login details.

Anyone can be a victim so don’t be proud by saying “I am not that stupid.”

As you get older you will have to invest more conservatively; that does not necessarily mean transferring from growth to conservative funds but investing some of your current savings into low risk accounts. The deciding factor is your timeline. How soon you need the money and funds which are going to be used within 12 months are best invested conservatively.

 

www.robertastewart.com

 

ABOUT THIS ARTICLE

This article is of the opinion of the writer and may not be applicable to your personal circumstances. Feel free to share this article. You may also use this article for your website/blog or as content for your ebook.

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The bandwagon effect!

The bandwagon effect!

“Safety in numbers” is an old saying which is the downfall of many people. We have seen it so many times throughout history that when the share markets are on the rise investors jump on the bandwagon; this pushes the share price up even further. It is the same story that something is only worth what others are prepared to pay for. 

During the 1980s when the markets were humming along investors kept jumping on the bandwagon; some even borrowed money to purchase shares using their current share portfolio as collateral. Higher share prices meant that investors could borrow more. One person told me at the time that he knew someone who took out a mortgage on his home to buy shares.

Then the crash happened on Black Monday 1987; the result was that shares were worth less than the loans taken out to purchase them. In many cases they were ot even worth the price of the paper they were printed on.

The same bandwagon effect which pushed the prices of the shares up also caused the crash as investors jumped off the bandwagon.

We have also seen it in other industries. During the early 1970s farmers were buying bobby calves to hand raise for beef. Prices for beef were high but then prices took a huge dive and prices for some beef cattle did not even recoup the money which was spent raising them. Over supply of beef was a factor. I am speaking from experience here because my father was rearing calves for beef.

Back to the present, it is no secret that cryptocurrency has seen the same kind of bandwagon effect. It has experienced swings and roundabouts and will continue to do so. It all boils down to the fact that something is only worth what others are prepared to pay for. 

What often drives the markets is often the fear of missing out or as it is often called “FOMO.” Others see the success others are having with their investments and decide to jump on the bandwagon without any thought to whether their investment fits in with their goals. The young ones who are not tied down with commitments are mainly guilty of this but not necessarily. A couple of years ago one particular share was on a roll. Its share price increased ten fold and a lot of young investors jumped on the bandwagon; then the share price slid and it fell to one tenth of its peak. The media claimed that investors lost 90% of their money but honestly that isn’t true because it all depends on when they bought their shares. It may be true if one purchased their shares at the peak. 

The Global Financial Crisis led to several finance companies going belly up. There were heartbreaking stories of retired folk losing their entire savings after having everything invested in the one company. The TV advertising for these companies were aimed at the older folk. Many jumped on the bandwagon but investing everything into the one company, well, did they ever hear about diversification?

It is worth pointing out that if there is an opportunity for capital gain then there is also an opportunity for a capital loss.

All investors must be aware that markets go up and down; a cool head is needed during the periods of volatility. The risk you are taking on must be factored into your investment decisions. It all boils down to your timeline and whether the loss of your capital will cause you any distress. It is no good investing in something if the risk of losing your money is going to cause you to lose sleep.

Feel free to share this article. You may use this article as content for your website or ebook.

www.robertastewart.com

Thinking about giving cryptocurrency a go? Here is something which may interest you:

https://coinbase.com/join/gochwv